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**Green/climate finance articles from IPE**
[Investment & Pensions Europe (IPE)](https://www.ipe.com/) is the leading monthly publication for institutional investors and those responsible for running pension funds in Europe.

[IPE special reports on EU Sustainable Finance](https://www.ipe.com/reports/eu-sustainable-finance/32220.topic)

**Summary**
I manually selected posts on green/climate finance and places them under the following headings, with key/introductory text copied.

**Contents**
[TOC]

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## Relevant links

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[European Commission Sustainable finance](https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance_en)
The EU is examining how to integrate sustainability considerations into its financial policy framework in order to mobilise finance for sustainable growth.

[European Commission's Technical expert group on sustainable finance (TEG)](https://ec.europa.eu/info/publications/sustainable-finance-technical-expert-group_en) 

In its [26 April 2020 statement](https://ec.europa.eu/info/files/200426-sustainable-finance-teg-statement-recovery_en) on the Covid-19 crisis, the TEG encourages governments and the private sector to use EU Taxonomy, the Green Bond Standard and the Climate Benchmarks as tools to ensure a 'resilient, sustainable and fair' recovery.

The TEG followed up to this statement on 15 July 2020 with a [short paper](https://ec.europa.eu/info/files/200715-sustainable-finance-teg-statement-resilience-recovery_en) outlining 5 high-level principles for recovery & resilience, focused on applying the taxonomy.

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## Rules and related organisations

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[SASB and International Integrated Reporting Council to merge](https://www.ipe.com/news/sasb-and-international-integrated-reporting-council-to-merge/10049208.article)
**25 November 2020**

The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) are planning to merge, the organisations have announced.

They said the merged organisation, to be called the Value Reporting Foundation, could eventually integrate “other entities focussed on enterprise value creation”.

The Value Reporting Foundation and the Climate Disclosure Standards Board (CDSB) had jointly signalled interest in entering into exploratory discussions in the coming months, they said.

When formed by mid-2021, the merged organisation is to be led by Janine Guillot, currently CEO of SASB. Charles Tilley, CEO of IIRC, will serve as senior advisor, partnering with Guillot on the integration of the two organisations.

According to SASB and the IIRC, the SASB standards and the IIRC’s “<IR> Framework” will remain complementary tools, but the Value Reporting Foundation “will facilitate the use of both together”.

Their merger announcement comes amid a flurry of activity centred on reducing fragmentation in the field of corporate sustainability reporting, not least a move by the European Commission to initiate work on a possible non-financial reporting standard.

In September the IIRC and SASB came together with three other major sustainability reporting standard- and framework setters to outline how they could form the basis of a comprehensive corporate reporting system, and today they said their merger would advance the quintet’s work


The Global Reporting Initiative (GRI) was a co-founder of the IIRC and said it welcomed the news of the merger.

“For a sustainable future, companies need to take responsibility for their impacts on the world,” said chair Eric Hespenheide. 

”Understanding the financial risks related to these sustainability impacts on a company’s bottom line and value creation are critical for providers of financial capital. The formation of the Value Reporting Foundation represents a significant step towards a better representation of sustainability related risks in financial reporting.”

He added: “I am looking forward to working with the Value Reporting Foundation on advancing corporate transparency.”

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[Standard-setters outline ‘vision’ for ESG corporate reporting solution](https://www.ipe.com/news/standard-setters-outline-vision-for-esg-corporate-reporting-solution/10047766.article)
**11 September 2020**

Leading sustainability reporting organisations have come together to agree a shared vision of what is needed to help resolve confusion surrounding sustainability disclosure and develop what they describe as a more coherent, comprehensive corporate reporting system.

The organisations said they were also publishing a joint statement of intent to drive towards this goal, by working together and by each committing to engage with key actors, including IOSCO and the IFRS, the European Commission, and the World Economic Forum’s International Business Council.

Mardi McBrien, managing director at the Climate Disclosure Standards Board (CDSB), said the joint statement was “a natural next step as we look to form a complete picture of how these standards might complement financial GAAP – integrating with the TCFD”.

“We are looking forward to developing this picture further in the near future to meet the growing demands of investors, governments and consumers globally.”

Between them, the organisations guide the majority of sustainability reporting. GRI, SASB, CDP and CDSB set frameworks and standards for sustainability disclosure, while the International Integrated Reporting Council (IIRC) provides a framework that connects sustainability disclosure to reporting on financial “and other capitals”.

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[EC taxonomy consultation triggers ‘environmental integrity’ warnings](https://www.ipe.com/news/ec-taxonomy-consultation-triggers-environmental-integrity-warnings/10049113.article)
**20 November 2020**
The European Commission has launched a public consultation on the first two sets of detailed screening criteria under the EU sustainability taxonomy regulation, triggering warnings that they are at risk of deviating from scientific evidence.

Set out in a [draft delegated act](https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en#201120), the criteria in question are for determining which economic activities can be said to substantially contribute to climate change mitigation or adaptation.

The criteria generally follow the recommendations from the technical expert group (TEG) that advised the Commission on its sustainable finance action plan, but deviate from them in some respects.

Tsvetelina Kuzmanova, policy advisor at environment think tank E3G, said the delegated act had strengthened some of the thresholds compared with the TEG report, but that “we are concerned about the environmental integrity of the thresholds that have been weakened”.

“The strength of the EU taxonomy is that it sets science-based screening criteria against greenwashing, but the draft shows that the screening criteria proposed fail to rely on up-to-date data and established objectives across all activities,” she added.

The think tank said it was concerned some of the thresholds deviated from scientific evidence as a result of political and industry pressure.

It highlighted as sources of concern the potential use of natural gas as well as thresholds in the manufacturing, construction, agriculture, forestry and bioenergy sectors, saying these should be revisited.

Nathan Fabian, chief responsible investment officer at the Principles of Responsible Investment, was rapporteur for the TEG – and was recently appointed chair of the Platform on Sustainable Finance, the successor to the TEG.

He said the changes to the TEG’s recommendations appeared to result from “a combination of adjustments to improve measurability, resolve presentational issues in criteria, align criteria more closely with EU legislation and the addition of criteria for some economic activities”.

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[EU sustainable finance: The promise of disclosures](https://www.ipe.com/reports/eu-sustainable-finance-the-promise-of-disclosures/10047480.article)
**September 2020**
New EU sustainability reporting requirements for investors could drive companies to improve disclosures. But making the new standards useful for end-investors could still be a challenge

*Key points*

- European supervisors have proposed a template for harmonised reporting on adverse sustainability impacts arising from investment decisions
- Mandatory templates are also in the pipeline for pre-contractual and period disclosures for two types of sustainability-related funds
- There is widespread support for the goals behind the rules on sustainable - finance disclosure (SFDR)
- But there are concerns about data gaps, excess disclosure, and misleading retail investors

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[Net-zero asset owner alliance unveils target-setting range, protocol](https://www.ipe.com/news/net-zero-asset-owner-alliance-unveils-target-setting-range-protocol/10048387.article)
**13 October 2020**
The members of the now 30-strong UN-convened Net-Zero Asset Owner Alliance have collectively agreed the range within which their first set of concrete portfolio decarbonisation targets will fall.

Based on an assessment of pathways to the Intergovernmental Panel on Climate Change 1.5°C scenario, Alliance members determined that greenhouse gas emission (GHG) reductions for the period 2020-2025 should range at least between -16% and -29% from 2019.

The Alliance said implementation of targets within this range would represent a substantial decoupling of asset owners’ portfolio GHG emissions from the global economy. Individual Alliance members are to set their portfolio targets in the first quarter of next year.

The Alliance said while some members would set large reduction targets, others’ would be at the lower end of the range either because the asset owners were further along their journey to net-zero or may face geographic or policy constraints requiring a slower initial decarbonisation pace.

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[ESMA launches consultation on taxonomy KPI reporting](https://www.ipe.com/news/esma-launches-consultation-on-taxonomy-kpi-reporting/10048840.article)
**6 November 2020**
ESMA has launched a consultation on key performance indicators (KPIs) that corporates and asset managers should disclose to convey how their activities relate to those deemed environmentally sustainable under the EU taxonomy.

Under the EU taxonomy regulation, large listed issuers have to report on the proportion of their turnover, capital expenditure and operating expenditure related to activities deemed environmentally sustainable under the EU taxonomy framework.

The regulation does not specify any KPIs to be used by asset managers, but ESMA has proposed one for them, consisting of a ratio of eligible investments that are taxonomy-aligned.

It said that very few asset managers would be obliged to produce this based on current regulation, but that a forthcoming review of the Non-Financial Reporting Directive could bring more asset managers into scope.

The corporate-focussed part of the consultation is of immediate interest to more asset managers looking to use the EU taxonomy as a tool to inform their investment activity but also because they themselves are already facing taxonomy-referencing disclosure obligations at product-level.

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## International groupings/networks

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[Net-zero asset manager initiative kicks off with 30 founding signatories](https://www.ipe.com/news/net-zero-asset-manager-initiative-kicks-off-with-30-founding-signatories/10049545.article)
**11 December 2020**
An initiative specifically focussed on asset managers getting to net-zero has been launched with 30* founding signatories drawn from across the world.

The launch of the Net Zero Asset Managers initiative comes ahead of the five-year anniversary of the Paris Agreement tomorrow.

Other asset managers are encouraged and expected to join the initiative. Signatories commit to supporting the goal of net-zero greenhouse gas emissions by 2050 or sooner and investing aligned with that goal.

The commitment includes prioritising the achievement of real economy emission reductions within the sectors and companies in which the asset managers invest.

Asset managers signed up to the initiative commit to working with asset owner clients on decarbonisation goals. Fulfilling the asset managers’ commitments is likely to be contingent on the collaboration with asset owners, the initiative noted.

To fulfil the requirements established by the initiative, signatories also make further commitments, including to setting an interim target for 2030 for the proportion of assets to be managed in line with the net-zero goal.


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## National level rules

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[Swiss supervisory body adds climate risk monitoring to new strategy](https://www.ipe.com/news/swiss-supervisory-body-adds-climate-risk-monitoring-to-new-strategy/10049184.article)
**24 November 2020**
The Swiss financial market supervision authority, FINMA, will “actively address” financial risks relating to climate change, it said, outlining its strategic goals for 2021-2025.

The regulator has added sustainability to the list of top supervisory activities for the coming years – a brand new goal that was not present in its list set for 2017-2020. It will also concentrate on digitization and innovation.

Its board of directors listed 10 goals for its 2021-2025 strategy approved by the Federal Council.

FINMA stated that, in line with its mandate, it will urge financial institutions to tackle climate-related risks transparently by means of disclosure. It will monitor institutions on their compliance with these requirements.

The authority identified physical climate and climate-related transition risks as elements that can lead to spillover effects into credit, market and operational risks.

It added that climate change, and regulatory changes required to achieve climate goals, can have a impact on the “impairment of certain assets” and on the “frequency of major losses in the insurance sector.”

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[LGPS TCFD consultation among myriad UK green finance plans](https://www.ipe.com/news/lgps-tcfd-consultation-among-myriad-uk-green-finance-plans/10048863.article)
**10 November 2020**
The local government ministry intends to next year consult on climate-related financial disclosures by local authority pension schemes, according to a policy paper published by the UK government in connection with a wide-ranging financial services announcement by the Chancellor yesterday.

According to the interim report of the UK’s joint government-regulator body on the Taskforce on Climate-related Financial Disclosures (TCFD) framework, the ministry of housing, communities and local government intends to consult next year on implementation of mandatory TCFD-aligned reporting in the local government pension scheme (LGPS) by 2023.

In a statement to parliament yesterday, Chancellor Rishi Sunak said the UK intended to introduce fully mandatory climate-related financial disclosure requirements across the economy by 2025.

Mandatory TCFD-based disclosure is one of the targets of the private finance agenda for next year’s UN climate summit (COP26), as laid out by Mark Carney yesterday.

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## Tools for investors/companies

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[BlackRock adds climate risk analytics to Aladdin to plug investor info gap](https://www.ipe.com/news/blackrock-adds-climate-risk-analytics-to-aladdin-to-plug-investor-info-gap/10049340.article)
**01 December 2020**

BlackRock has developed a new analytics offering that it claims sets “a new standard in providing investors actionable security-level data on climate risk”.

It said that with Aladdin Climate, investors could now analyse climate risk and opportunities at the security level and measure the impact of policy changes, technology, and energy supply on specific investments.

The new offering also investors measures of physical climate risk, helping them to stress test investments in different climate scenarios.

“There is no single issue that clients ask us more about than the impact of climate risk on their portfolio,” said Rob Goldstein, BlackRock’s chief operating officer.

“Yet, while lots of people are talking about climate risk today, what investors need to make informed decisions is data tied to specific securities in their portfolio. Aladdin Climate is a dramatic step forward to begin filling the information gap necessary to build truly sustainable portfolios.”

The development of Aladdin Climate comes against the backdrop of what BlackRock said was “dramatic growth in relevant corporate disclosures and unstructured data”.

This had created “unprecedented opportunities to enhance climate analytics,” the world’s largest asset manager said.

BlackRock also announced that it had expanded access to environmental, social and governance (ESG) data through new partnerships with data providers [Sustainalytics](https://www.sustainalytics.com/) and [Refiniti](https://www.refinitiv.com/en).

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[ATP helps squeeze global emissions with new ESG filter for utilities](https://www.ipe.com/news/atp-helps-squeeze-global-emissions-with-new-esg-filter-for-utilities/10049176.article?adredir=1)
**25 November 2020**

Denmark’s largest pension fund ATP has just added a newly-devised formula to the stock-selection algorithm for its foreign equities portfolio, which it said predicts which utility companies will make the biggest reductions in their greenhouse gas (GHG) emissions in years to come.

Identifying the stocks in this sector which will improve – rather than those that have already made the green transition – not only has a bigger impact on global emissions, but also creates marginally better returns on investment, the DKK936bn (€126bn) fund claimed.

Christian Kjær, head of liquid markets, told IPE: “What we’ve done proves that investing in green utilities is fine, but it won’t lower global emissions, so investing there will not create a lot of impact.

“We’re going after the companies that are able to lower their emissions, and our research shows that these will be the financial winners,” he said.

Extensive data crunching including back testing resulted in Kjær’s team discovering that a modified version of MSCI’s ESG score for utility companies had in fact been an accurate predictor of how much those firms would go on to reduce their GHG emissions, according to ATP.

“There are a lot of fortune tellers out there who have opinions about what will happen, but this seems to be something quite precise,” Kjær said.

The model created from this has now been implemented in ATP’s algorithm for the international quant portfolio, which accounts for around DKK49bn of its return-seeking investment portfolio, which has a market value of DKK348bn.

Another effect of adding the new selector for utility companies is, ATP said, that it keeps companies building new coal-fired power plants out of the pension fund’s portfolio.

Kjær said the process began with his team considering which industrial sector would be most affected by the coming reduction of GHG emissions around the world.

“If you believe in this green transition and that greenhouse gas emissions are going to have to come down, then you also have to believe it is definitely going to affect utilities because they account for most of the emissions,” he said.

Utilities make up 39 of 479 stocks in ATP’s global equity portfolio,  because the sector’s risk profile suits the pension fund’s low-risk tilt, Kjær explained.

However, utility stocks are also among the highest emitters, he said, and while utilities cover just above 6% of the total market value in ATP’s global equity portfolio, they account for 70 % of the portfolio’s GHG emissions.

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[Sweden roundup: Alecta’s new CO2 tool; Länsförsäkringar bans oil, gas](https://www.ipe.com/news/sweden-roundup-alectas-new-co2-tool-l%C3%A4nsf%C3%B6rs%C3%A4kringar-bans-oil-gas/10048910.article)
**12 November 2020**
Alecta, Sweden’s biggest pension fund Alecta, has developed a calculator to determine how carbon dioxide prices could affect the market value of companies.

The SEK1trn (€98bn) pension fund said the tool, made available on its website, was based on data from its climate risk report and showed how the increasing price of carbon dioxide emissions affected pension managers’ assets.

Carina Silberg, head of corporate governance and sustainability at Alecta, said: “The calculation tool we have developed is, as far as we know, the first of its kind.”

The pension fund said the future cost of carbon emissions was usually not included in the valuation of companies today, which risked companies being overvalued, adding that valuations would vary widely depending on the specific company and sector.

Alecta said the new calculator took into account not only of the current cost of carbon emissions, but also how much these prices would need to increase in order to meet various climate targets in the future.

The pension fund mentioned that other factors needed to be taken into account in forecasts, such as who would bear the cost of emission – the company itself, its customers or suppliers – and how easy it would be for the firm in question to reduce its emissions.

“It is a very complex matter, but very important for our savers’ pensions,” said Silberg.

Alecta said its climate risk report showed that it was difficult to obtain the data needed to correctly assess companies’ emissions, and that the prices of carbon emissions recommended by various international organisations to achieve climate goals varied widely, ranging from $100 (€85) to $1,000 per tonne.

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[Climate roundup: Mercer launches 1.5°C advice, analytics solution](https://www.ipe.com/news/climate-roundup-mercer-launches-15c-advice-analytics-solution/10048911.article)
**11 November 2020**
Mercer has launched analytics and advice for institutional investors wanting to transition to a 1.5°C global warming scenario as outlined in the Paris Agreement.

The consultancy said it launched the solution, which it has dubbed Analytics for Climate Transition (ACT), because institutional investors were seeking ways to assess the companies they are invested in with respect to their commitment and ability to, transition to a net-zero economy by 2050, “with an important milestone of 45% emissions reduction by 2030”.

Mercer said ACT is being offered to its investment consulting clients worldwide and will be used to support climate transition strategies across its $304.5bn (€253.5bn) of global assets under management on behalf of its investment solutions clients.

“Many investors are not yet equipped to invest in a decarbonising economy, and some don’t know where to start,” said Helga Birgden, global business leader for responsible investment at Mercer.





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## State of progress in uptake of climate criteria/metrics

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[Swiss schemes adopt ESG criteria in alternative investments, says ASIP](https://www.ipe.com/news/swiss-schemes-adopt-esg-criteria-in-alternative-investments-says-asip/10049313.article)
01 December 2020

The majority of Swiss pension funds integrate environmental, social and governance (ESG) criteria to invest in alternative asset classes, according to a survey conducted by pension fund association ASIP.

The research showed that 52% of pension schemes use sustainability criteria to invest in private equity.

Pension funds tend to apply criteria such as exclusion, reduction of climate risks, ESG integration in portfolio analysis, and the United Nations’ Sustainable Development Goals (SDGs) including social housing.

ASIP found that 55% of respondents put in place a variety of sustainability strategies for real estate investments as well.

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[Austrian Pensionskassen exposed to sectors with adverse climate impact](https://www.ipe.com/news/austrian-pensionskassen-exposed-to-sectors-with-adverse-climate-impact/10049028.article)
**17 November 2020**
Austrian Pensionskassen are allocating 31.3% of their assets to sectors that have a negative impact on climate, according to a report by the Financial Market Authority (FMA).

The regulator conducted a stress test to assess risk management activities of various pension funds’ business models in the field of sustainability and impact on climate. It found that Pensionskassen are particularly exposed to energy-intensive (12.1%) and real estate (9.9%) segments with an impact on climate.

The FMA considered utilities, transport, real estate and energy-intensive segments as so-called “climate-relevant” sectors, based on their contribution to CO2 emissions, while fossil fuels contribute indirectly to high CO2 emissions, it added.

The report noted that the share of assets invested in activities with an impact on climate varies for individual Pensionskassen between 28.6% and 38.6%, but seven out of eight funds show values above 30%.

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## Companies/schemes making pledges

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[PGB to decrease carbon footprint by 50% in 2022](https://www.ipe.com/news/pgb-to-decrease-carbon-footprint-by-50-in-2022/10049201.article)
The €29.4bn Dutch pension fund PGB wants to halve the carbon footprint of its total investment portfolio in two years’ time. Separately, the fund is also planning to divest from coal, shale gas and oil sands from 1 January 2021.

The multi-sector pension fund is taking both steps with a view to reaching the goals of the Paris Climate Agreement.

“And we also want to reduce the risks climate change poses to our pension investments and improve our prospective returns,” said Rob Heerkens, a member of the fund’s board of trustees.

“Besides, we have also concluded that our members want us to do something about the climate problem,” he added.

A PGB member survey in 2016 found that 90% of its members wanted the fund to invest in renewable energy, while only 37% said they want their pension to be invested in fossil fuels.

In a separate 2019 survey, three quarters of members said they expected PGB to actively contribute to a better world through its investments.

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[Macquarie Asset Management declares 2040 net-zero commitment](https://www.ipe.com/news/macquarie-asset-management-declares-2040-net-zero-commitment/10049516.article)
**09 December 2020**

Macquarie Asset Management (MAM), the world’s largest infrastructure manager, is committing to manage its portfolio in line with net-zero greenhouse gas emissions by 2040, it announced today.

One of the steps linked to this commitment, MAM said, is to work with its portfolio companies with the aim that by 2030 they will be on course to be net-zero by 2040 at the latest, depending on their business plan.

“On the fifth anniversary of the Paris Agreement, this announcement signals our commitment to combating climate change and accelerating the transition to a sustainable low carbon future,” said Martin Stanley, head of MAM, in a letter to the asset manager’s investors.

“We look forward to working with you, our investors, as well as our portfolio companies, regulators, and other stakeholders to achieve these transformational objectives for the benefit of all.”

With €209bn assets under management, Macquarie Infrastructure & Real Assets is the largest infrastructure investment manager, according to IPE Real Asset’s Top 100.

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[PFZW to reduce carbon footprint by 30% in 2025](https://www.ipe.com/news/pfzw-to-reduce-carbon-footprint-by-30-in-2025/10048970.article)
**13 November 2020**

The €238bn Dutch scheme for healthcare workers PFZW is looking to reduce the carbon footprint of its listed equity portfolio by 30% in 2025. It also plans to more than double its investments in the United Nations’ Sustainable Development Goals (SDGs) over the next five years.

The fund had already reduced its carbon footprint by half since 2015 by divesting from the most polluting companies, but the next 30% will be “more challenging to achieve”, according to Joanne Kellermann, director of the Netherlands’ second-largest pension fund.

“With our new policy we are partly entering uncharted territory. This is an exciting and demanding goal, but we owe it to our members and to society to make a success of it,” she said. PFZW is striving to have a climate-neutral investment portfolio by 2050.

PFZW also said it will sell its €500m total stake in companies that produce more than 30% of their revenues from coal or more than 10% from oil sands. But the fund will continue to invest in fossil fuels.

“We could have easily reached our goal of 30% reduction by divesting from fossil fuels, but we are an investor who invests in the real economy and as long as fossil fuels are part of this, we will continue to invest in these companies,” a PFZW spokesperson told IPE.

Engagement

In order to reach its goal of 30% carbon reduction, PFZW will intensify its engagement efforts with companies instead.

“The bulk of the CO2 reduction will now have to come from companies that we already own, so whether or not we will reach our target will depend on the question whether these companies will deliver on this,” the spokesperson said.

PFZW is mostly a passive investor on the equity side, but since 2015 it has divested from some 200 companies that did not meet its minimum sustainability requirements.

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[Denmark’s P+ shakes up responsible policy, divesting fossils](https://www.ipe.com/news/denmarks-p-shakes-up-responsible-policy-divesting-fossils/10048813.article)
**5 November 2020**
Denmark’s P+ is setting a climate goal for all investments – carbon neutrality by 2050 – and said it will lower its threshold for the exclusion of companies failing to meet its expectations, as part of a series of changes to the pension fund’s sustainable investment approach.

The member-owned scheme for Danish professionals with higher academic qualifications, which covers lawyers, economists, engineers and others, also said it would blacklist coal and oil companies as part of the ESG overhaul.

Anders Eldrup, chair of P+’s supervisory board, said: “With increasing emphasis, our members – at annual general meetings and at other times – have been saying they want the pension fund to play a more active role in the green transition.

“We have therefore set ourselves an ambitious goal that all investments in our portfolio must be CO2-neutral by 2050,” he added.

He said the supervisory board had decided to divest from all coal companies, unless they derived less than 5% turnover from the fossil fuel, and could provide evidence of a green transition process.

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[Publica joins international organisations for ESG best practice](https://www.ipe.com/news/publica-joins-international-organisations-for-esg-best-practice/10049501.article)
**9 December 2020**
Switzerland’s largest pension fund, Publica, has joined four organisations active in the field of sustainable investments internationally.

The organisations include the Principles for Responsible Investment, the Institutional Investor Group on Climate Change, Climate Action 100+ and the Montréal Carbon Pledge.

With the new memberships, Publica plans to step up its efforts on the use of environmental, social and corporate governance (ESG) through the access to international best practices.

Stefan Beiner, head of asset management at Publica, said: “The goal to take long-term investment trends into account takes an important step [through the new memberships]”.

Publica is a founding member of the Swiss Association for Responsible Investments (SVVK-ASIR), alongside SBB, the pension fund for the federal railways, and the scheme for the canton of Zurich, BVK, among others.

According to its report on climate-related opportunities and risks for 2019, Publica excluded investments in the coal sector, while preferring renewable energies, wind farms or photovoltaic systems, through a strategic asset allocation worth 3.5% of its total assets.


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## General 
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[BP chief economist suggests focus on prices rather than climate scenarios](ttps://www.ipe.com/news/bp-chief-economist-suggests-focus-on-prices-rather-than-climate-scenarios/10049469.article?adredir=1)
**08 December 2020**

BP’s chief economist said he wondered if there was a simpler approach with which progress could be made, and suggested attention be turned to developing simple energy price bands instead.

He said this idea was based on the consideration that “all the companies subject to the disclosure rules we’re discussing today are price takers in energy markets” and that this meant the risk they faced was that of price at which they sell or trade energy falling sharply.

“Given that, does that mean we can shortcut the use of complicated climate scenarios and go straight to price metrics?” he asked.

“The outlook for energy prices will clearly depend on views about the speed and nature of the energy transition, but my guess is that by averaging across a wide range of different scenarios it’d be relatively straightforward to construct a set of ranges for different energy and carbon prices which could then be used to test the resilience of companies.”

Lucrezia Reichlin, professor of economics at London Business School and a trustee of the IFRS Foundation, which has proposed the establishment of a sustainability standards board, said Dale’s proposal was interesting and simpler in terms of communication, but “still you’ll have to have scenarios”.

She said she agreed that “for someone who comes from the outside, like me, it’s kind of confusing” and that there would be some “learning by doing”, but that the Task Force on Climate-related Financial Disclosures was the “starting point because that’s where experience has been accumulated”.

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[Climate roundup: FSB on implications of climate change for financial stability](https://www.ipe.com/news/climate-roundup-fsb-on-implications-of-climate-change-for-financial-stability/10049137.article)
**23 November 2020**
The Financial Stability Board (FSB) has published a [report](https://www.fsb.org/wp-content/uploads/P231120.pdf) today discussing how climate risks might impact, or be amplified by, the financial system, particularly focusing on the channels that could materialise in the short to medium term.

Current central estimates of the impact of physical risks on asset prices appear relatively contained but may be subject to considerable tail risk, the report found.

“The manifestation of physical risks could lead to a sharp fall in asset prices and increase in uncertainty. A disorderly transition to a low carbon economy could also have a destabilising effect on the financial system,” it said.

The FSB also said that climate-related risks – physical and transition risks – may also affect how the global financial system responds to shocks. They may give rise to abrupt increases in risk premia across a wide range of assets.

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[Figueres calls for pan-finance sector net-zero commitment](https://www.ipe.com/figueres-calls-for-pan-finance-sector-net-zero-commitment/10049076.article)
**19 November 2020**
The entirety of the finance sector needs to commit to net-zero emissions by 2050, former UN climate chief Christiana Figueres told those tuned into the closing, finance-focussed day of ‘Race to Zero Dialogues’.

The ‘Dialogues’ was a programme of events convened by the UN High-Level Champions for Global Climate Action to make sense of the path to net-zero by honing in on sector transitions. 

Speaking during a session organised by the UN-convened Net-Zero Asset Owner Alliance, which today announced three new members, Figueres said it was important to reach out to other parts in the financial sector that were not yet “on board”. 

“By COP26 we need to see asset managers commit to align their portfolios to net-zero by 2050. Some are already moving in that direction, but we should not be able to [itemise] them because it has to be normalised.”

The same applied for commercial banks, venture capital, and other parts of the finance sector, said Figueres, who was executive secretary of the UN Framework Convention on Climate Change when the Paris Agreement was reached.



“Everyone should be embracing the paradigm shift to align finance with net-zero emissions before 2050,” she said.

The Net-Zero Asset Owner Alliance now counts 33 members with a combined $5.1trn in assets under management, up from 12 members and $2.4trn in assets at the launch in September 2019. The latest members are Denmark’s P+, Australian insurer QBE, and the UK’s St. James’s Place Wealth Management.

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[GPIF: Climate risk impacts all asset classes](https://www.ipe.com/news/gpif-climate-risk-impacts-all-asset-classes/10048966.article)
**13 November 2020**
The development of a social bond market is extremely important, although of all environmental, social and governance (ESG) issues risk associated with climate change poses the greatest challenge to investors, according to Masataka Miyazono, president of Japan’s Government Pension Investment Fund (GPIF).

“Risk occurs simultaneously in all asset classes, though the magnitude of the impact may vary,” Miyazono told a green and social bonds conference, jointly organised by the International Capital Markets Association (ICMA) and the Japan Securities Dealers Association, in Tokyo today.

He said: “No matter how much diversification you do, you cannot completely eliminate the risks. These risks are considered highly likely to materialise over the long term.”

GPIF, in its first published analysis of the impact of climate change on its portfolio, found that if the world could limit global warming from greenhouse gas emissions to 2°C, the value, particularly of Japanese companies, would increase.

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[Swiss schemes pushed to meet climate targets, curb GHG emissions](https://www.ipe.com/news/swiss-schemes-pushed-to-meet-climate-targets-curb-ghg-emissions/10048961.article)
**13 November 2020**
Swiss pension funds are on a path to curb their financing around greenhouse gas emissions while more broadly increasing their commitment to environmental, social and governance (ESG) policies.

The Climate Alliance, a league of civil society organisations, expects the share of pension capital deployed in line with the goals of the Paris Agreement to double in 2021, Sandro Leuenberger, responsible for finance and climate at the organization, told IPE.

According to Climate Alliance’s latest rating, however, 92% of pension capital in Switzerland is currently invested without, or only barely, considering decarbonisation, and only 8% is invested based on strategies that lead to a reduction of CO2 emissions.

“Climate Alliance expects that the 8% will double to 16% in 2021,” Leuenberger said.

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[Investors warned about carbon intensity metric in EU climate indices](https://www.ipe.com/news/investors-warned-about-carbon-intensity-metric-in-eu-climate-indices/10048934.article)
**12 November 2020**
Investors wanting to allocate to EU climate benchmarks without encouraging greenwashing should ensure the underlying methodologies make as little use as possible of the carbon intensity measure mandated by the EU regulation, Scientific Beta has said.

The regulation on the EU climate benchmarks requires that the carbon intensity measure used in portfolio construction be based on enterprise value, including cash (EVIC).

Another way of normalising emissions is by revenues, which is a feature of the weighted average carbon intensity metric recommended by the Task Force on Climate-related Financial Disclosures (TCFD).

Scientific Beta said normalising emissions by revenue is an established market standard and that the EVIC variation “has not been properly justified or thought through”.

According to the index provider, enterprise value imports equity market volatility.

“This weakens the link between changes in measured carbon intensity and underlying emissions, and produces carbon intensity volatility that facilitates greenwashing,” it said in a press release today.

“From a climate impact point of view, one should avoid guiding portfolio construction by enterprise value-based carbon intensity,” it said.

Scientific Beta has been sharply critical of proposals for and drafts of the rules for the EU climate benchmarks.

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[FCA develops principles to tackle greenwashing concerns](https://www.ipe.com/news/fca-develops-principles-to-tackle-greenwashing-concerns/10048883.article)
**11 November 2020**
The UK’s Financial Conduct Authority (FCA) has developed a set of principles as part of its efforts to address potential greenwashing, the regulator’s CEO revealed yesterday.

Speaking during a green finance conference broadcast from London, Nikhil Rathi said the principles were intended to help fund management firms “interpret existing rules requiring that disclosures are ‘fair, clear and not misleading’, including when they wanted to submit new products for regulatory authorisation.

“Better disclosures will, in turn, help consumers understand and compare the products they are offered,” Rathi added. “We will shortly start discussing these principles with industry with a view to finalising them in the new year.”

In a feedback statement on climate change and green finance last year, the FCA said it would carry out further policy analysis on greenwashing and take action, for example guidance, “to address concerns as appropriate”.
The supervisor has said greenwashing “consists in gaining an unfair competitive advantage by marketing a financial product as environmentally friendly, when in fact basic environmental standards have not been met”.

ESMA is proposing the guidelines in connection with the EU regulation on facilitating cross-border distribution of investment funds, although there is a link to the EU’s sustainable finance disclosure regulation and implementing rules that ESMA is working on with the other European supervisory authorities. 

ESMA’s consultation on the fund marketing guidelines runs until 8 February 2021. It plans to issue final guidelines by 2 August next year. The consultation paper can be found here.

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[Carney lays down investor portfolio alignment metric challenge](https://www.ipe.com/news/carney-lays-down-investor-portfolio-alignment-metric-challenge/10048848.article)
**9 November 2020**

Mark Carney, the United Nations special envoy for climate action and finance and the UK prime minister’s finance adviser for COP26, has called on investors to use the months leading up to the UN climate change summit in Glasgow to agree on a measure of portfolio alignment with climate targets.

He was speaking on the opening day of the Green Horizon Summit, broadcast from London, outlining in greater detail the private finance strategy for COP26, the postponed UN climate change conference that will now be hosted by the UK and Italy next year.

Under the heading of the “returns” pillar of the strategy, Carney said investors should disclose how closely their portfolios were aligned with the transition to net-zero but that existing climate-related metrics were not “best suited to measuring a whole economy transition”.

“Carbon footprints and CO2 emissions per dollar invested aren’t forward-looking,” Carney said. “ESG metrics are inconsistent, poorly correlated, and their ‘E’ is not benchmarked to net zero.

“And taxonomies, while useful for measuring the percentage of assets invested in certain activities, capture only a small proportion of business activity, cannot chart progress through 50 shades of green and are not yet dynamic enough to account for new technology developments.”

He pointed investors in the direction of a new report on measuring portfolio alignment that was published today by a private sector team led by David Blood, co-founder of Generation Investment Management.

“Over the next 12 months on the road to Glasgow, industry should use David’s report as a basis for a discussion on the most useful measurement of portfolio alignment,” Carney said.

The [Generation-led report](https://www.tcfdhub.org/wp-content/uploads/2020/10/PAT-Report-20201109-Final.pdf) considers a range of alignment measurement approaches, but focuses on a so-called “degree warming metric”, which shows a potential global temperature rise associated with the greenhouse gas emissions from a given company or portfolio.

The report comes as the Task Force on Climate-related Disclosures (TCFD) [last week launched a consultation on forward-looking climate metrics such as degree warming](https://www.ipe.com/news/esg-roundup-blackrock-backs-ifrs-standards-board-proposal/10048703.article), also known as “implied temperature rise”, and as major investor groups such as the UN Net-Zero Asset Owner Alliance and the Institutional Investors Group on Climate Change consult on portfolio alignment-related approaches.